QVT Advisors Private Ltd, the US-based investor which filed a winding up petition in the Bombay High Court against troubled pharma major Wockhardt, has submitted a restructuring plan on behalf of holders of Wockhardt?s $110 million foreign currency convertible bonds. The plan has been submitted to the Corporate Debt Restructuring (CDR) cell, CDR lenders and Wockhardt.
QVT, which had filed the winding up petition since Wockhardt defaulted on its obligations under the terms of the defaulted bonds, is considering filing similar petitions in the US, the UK and other countries. QVT had subscribed to about 41% of Wockhardt?s FCCBs.
QVT also said it is disappointed that neither Wockhardt nor the CDR lenders have engaged in a meaningful dialogue with the holders of the defaulted bonds with respect to this plan, a statement said.
If Wockhardt continues to ignore the efforts made by holders of the defaulted bonds to salvage the situation by restructuring the debt in a mutually acceptable manner, the company may remain exposed to this winding up action, which may restrict the company from selling its nutrition business, it added. Shares of Wockhardt were down 2% to close at Rs 152.60 on the BSE on Monday.
Wockhardt, which has a debt of over Rs 3,700 crore, had undertaken a corporate debt restructuring programme last year. Under the CDR programme, the pharma company had offered to settle repayment of $110-million FCCBs, issued by it in 2004, at a discount.
Under the restructuring proposal, bondholders will exchange their defaulted bonds for newly issued FCCBs with a five-year maturity.
The new FCCBs will have the terms of mandatory conversion into the company?s shares at maturity. Issuance will be at the ratio of 1.295 new FCCBs for every defaulted bond.
Conversion price will be at a premium to the price of the company?s hares as on the date of maturity of the defaulted bonds and a semi-annual coupon of 5.0%.
QVT says the restructuring plan will help reduce the company?s current debt burden and increase liquidity for the company and its stakeholders by freeing up additional cash.
Moreover, QVT believes that the restructuring further benefits the company as the conversion of the new FCCBs into equity at maturity will increase the equity base of the company by up to approximately $75 million, thereby reducing leverage and strengthening the company’s balance sheet, the statement added.
QVT Advisors had even threatened to block Wockhardt?s Rs 620-crore sale of nutrition business to Abbott. Last year, Wockhardt had signed a deal to sell its nutrition business, including the Farex brand, to Abbott for Rs 620 crore.
In a separate deal, Wockhardt sold its animal care business to Pfizer for Rs 350 crore.